A common argument for capitalism and de-regulation is that it frees average people from soul-killing bureaucracy, oppression, tyranny and other evils. That raises the question: What happens to power when capitalism is freed and regulations are removed?
When government regulations are removed, most of the resulting new power flows from government to elsewhere. New power arises from freedom from regulations and burdens, including taxes. Power or freedom can flow to individuals or citizens generally, and/or various special interests including businesses and social and religious organizations such as political parties and specific religious denominations.
The business of business is business: Obviously, special interests will take as much of the new power as they can. For example, if environmental regulations are removed, businesses will pollute more and whatever costs are associated will be externalized to the local region, the entire nation or even the whole planet, depending on what pollutant(s) is involved. That will lower costs. Individuals and consumers may or may not see most of the cost savings. That will depend on market conditions.
In another example, deregulation of product safety standards for products will shift the burden of loss or injury from businesses to consumers. That will tend to favor businesses because going to court is expensive and often or usually not worth the time and expense. In that regard, most of the newly created power will flow from government to businesses. The lost regulations favored consumers. That protection is largely gone.
Similarly, deregulation of the payday loan industry, which the Trump administration recently accomplished, will make it easier for more consumers to go bankrupt. Apparently, most of the new power will flow to those businesses.
The business of government is protecting the public interest: On balance, deregulation will tend to free businesses and organizations to a significantly greater extent than individuals and consumers. In essence, power and freedom will flow to the private sector, whose focus is profit, not the public interest.
In theory, government is more accountable to individuals and consumers than private sector interests. At least politicians face elections. CEOs and investors in businesses do not face elections, and when business sectors are significantly deregulated, they do not face regulatory sanction when individuals and consumers are cheated or harmed.
THE QUESTIONS: 1. Is the net effect of deregulation usually more freedom enhancing for special interests or individuals-consumers?
2. Is the net effect of deregulation usually more freedom enhancing or freedom sapping for individuals-consumers?
B&B orig: 4/10/19
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